There is a need to bring changes in Labour Laws: Gautam Singhania, Raymond Group

Gautam Singhania, Chairman and Managing Director, Raymond Group, talks about the March quarter numbers, the demand trend of the textile, support from the government, real estate business and capacity utilisation among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts: 

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Q: Overall theme of textile sector is looking strong and we have seen your numbers, which is quite strong. There is a good demand and we have seen growth in terms of profitability, EBITDA and revenue. How will you summarize the overall business and going forward what is your business outlook? 

A: Things started better from November-December and I think the last quarter of the last financial year was pretty good. Currently, the problem is that after April, the lockdown started once again. So, the business is currently shut because when the market is closed then how will you do a business. In fact, every business is closed. The encouraging is that from today, Gujarat has started. So, I am hopeful that as Gujarat has opened, other states should also open. There is a demand in my opening but once the market opens, it will be helpful.

Q: How the business has been in April and May so far and things are opening slowly, so what are your projections for the first quarter of FY222? 

A: April and May have been shut completely, so what business can happen. When the shops are shut and there is a lockdown across the nation then what business can happen, but as Gujarat has opened and I expect that Maharashtra will also open in the next 5-10 days. So, by the end of this month, as the states will open up, I expect the bounce back will be pretty good.

Q: The government has a focus on the sector where it wants to create India a manufacturing hub under China Plus One strategy. So, let us know the kind of participation your company will have in it and how optimistic you are from the schemes the government has announced, especially the PLI scheme, the textile park it has talked about and so on? 

A: The fundamental issues that we have not solved in decades and it is the labour laws should be changed because today India has become very expensive for manufacturing. If you equate the cost of China and India or Ethiopia and India, then India has turned very expensive. And these labour laws are an important reason and this is the main thing that should be shorted out. Rest what we are doing is good but till it is not addressed our competitive will not see a huge increase.

Q: What kind of expectations do you have from the government, you have talked about the outlines but what is the solution that the industry can provide? 

A: Today, you should allow to hire and fire of your own. If the labour is not working then I have to sack him then there are many challenges. If we have to make someone VRS or scale down or do anything else, we cannot do it because the labour is quite protected in the country and that brings in inefficiency. If we cannot remove labour and he knows that his job is secured, which means, he will remain inefficient.

Q: You are saying that the demand trend is strong. Segment-wise where do you feel that you will get a good response? 

A: Try to understand, how to tell about the trend when the shop is closed. The whole country is under lockdown. What trend are you going to hit? And once, things open up, I am confident that demand will come back but first, we have to open up.

Q: Real estate is a small part of your business but interesting and important and you have focused a lot on it. What are the updates on that front? 

A: Again, while construction is going on, the sales galleries have been closed. I am very strong of the view that if you bring a rule and open up the sales gallery, then thousands go to the vegetable and fish market, but how many people go into the brand outlet or experience centre for real estate. If we have a shop of Raymond then tell us, we will not permit 20-40 people or if your shop is of 1,000 square feet then we will permit just 10 people, if it is 2,000 square feet then 20 people will be allowed and if 3,000 then just 30 people at a time. If you have an experience centre then it is huge and there is no crowding there. There should be a mindset that we have to keep the economy open or else people will die of hunger. Today, the traders' lobby and shopkeepers need business to run and that is the fundamental issue. You should say that not more than two people can stay in the shop there will be cue but slight business should happen because if sales do not take place then tomorrow the manufacturing process will come to an end. Due to this, lakhs of people who are engaged in the manufacturing sector will get impacted because no one will manufacture the products to stock them in their inventories. We manufacture products to sell them and if the sales are stopped then manufacturing will also come to an end.

Q: What is the capacity at which manufacturing is happening at the plants? 

A: Different businesses are in different capacities but how long it will work.

Q: But the peak is in a decline mode now, so hopefully, things will get better. But do you think that the government has handled the situation in a better way? 

A: I don’t want to comment on it. Let me tell you that I strongly believe that trade needs to open up. I am speaking on behalf of all traders not only Raymond shops. They need it, but they also need the business, they are hurting very badly and nobody is listening. I think, it is my humble request to the government to please open up shops, put some social distancing norms, put some restrictions but it must be opened. And, now, at a place like Mumbai, cases have declined and there are around 1,000-1,200 cases, not 10,000-15,000 and your health infrastructure is not under a pressure today, then you are shutting the shops.

Q: Undoubtedly, shops are shut but the online platform is available and people have adopted to be digital sales. What kind of focus do you have on the digital platform and how hopeful are you that it will be a good channel for the growth of the company in the coming years? 

A: Online works in some categories but it does not work in many categories. Online will work in the case of food but you can’t place an online order while being in the hotel. Similarly, in the case of wedding purchases, people come; they want to drape the fabric, touch the fabric and feel the fabric. I don’t think that it will go. It may happen to 2-4% online and it is happening but eventually, we will have to open the shops.

Q: You are known for prudent financial business acumen. So, under this situation when you see that there a lot of challenges, shutdowns are, stores are not open, then under such a situation, how will you keep the company financially strong and how have you worked on it? 

A: You just have to be very strong on the liquidity, be very careful of the cost and do proper cash management.

Q: There is a difficulty but when we talk about the Chinese imports then what are the steps the government should take for a further push to the sector like duty changes? 

A: Duty is fine but the wrong import that is coming from China, the misdeclaration that is happening from China, these things should be strictly governed. There is no action today. I mean today from China if you get the thing which is Polyester but the Polyester fabric coming in it says that it is wool, that is misdeclaration and is cheating to customer.